In today’s briefing:
- Outperformance Using Smartkarma Smartscore for KOSPI Stock Screen & Where There Is Smoke, Stay Away
- Portfolio Watch – Time for liquidity bets
- Sell in May & Go Away. In 2024, Should You?
- Dovish Fed Policy Statement and Respectable Corporate Profits: Both Supportive for US Equities
- What’s Driving Stock Prices?
- Iron Ore: 117 USD/Ton and Upwards to 130 Short-Term, Catalysts To Watch and Our Stock Screener
- Steno Signals #98 – The recession panic is back right as liquidity is returning!
- 1st Quarter 2024 Letter to Investors
Outperformance Using Smartkarma Smartscore for KOSPI Stock Screen & Where There Is Smoke, Stay Away
- In this insight, we discuss the use of Smartkarma Smartscore system to screen stocks in KOSPI 100.
- For top 50 companies (in KOSPI 100) in Smartscore rankings, their share prices were up on average 7% YTD. Bottom 50 companies had average share price decline of 7.8% YTD.
- In using the Smartkarma Smartscore system, it may be appropriate to describe it in terms of “WHERE THERE IS SMOKE, STAY AWAY.”
Portfolio Watch – Time for liquidity bets
- Hello everyone, and welcome back to our weekly portfolio watch.
- A slightly positive week for our macro portfolio, which after a couple of days of sell-off in equities have gained ground again after the FOMC meeting Wednesday, revealing the Fed’s intend of lowering the monthly redemption cap on USTs from USD 60 bn. to USD 25 bn.
- The slight dovish narrative is back in market pricing, and the mix of dovish central bank vibes and added liquidity will likely rule markets in the coming weeks, as economic data from the US will continue its run.
Sell in May & Go Away. In 2024, Should You?
- Stock Trader’s Almanac popularised Sell in May and go away. Repeated underperformance of the Dow Jones index during the six-month period from May to October lent credence to this.
- Twenty four years of data (May 2000 to April 2024) confirms the continuation of Nov to Apr outperformance over May to Oct.
- This outperformance gets exaggerated during election years. S&P 500 generated outperformance of 7.27% with Dow Jones delivering 9.18% followed by Nasdaq at 0.52%.
Dovish Fed Policy Statement and Respectable Corporate Profits: Both Supportive for US Equities
- Fed Chairman Powell offered markets a modestly dovish overview of the policy outlook after this week’s FOMC meeting, notably the more aggressive tapering of quantitative tightening.
- US corporate profit results for Q1 have been respectable compared to the previous decade, but revenue performance has been below par. Operating margins are holding up well.
- Analysts remain buoyant about the profit outlook for 2024 and next year, despite the Fed’s higher for longer approach, thereby suggesting that equity returns will be largely earnings-driven.
What’s Driving Stock Prices?
- A review of the main short-term drivers of stock prices, namely interest rates, geopolitical risk and the earnings outlook, are all pointing to higher stock prices.
- Short-Term technical indicators such as breadth and momentum are also bullish.
- The key risk to this bullish outlook is a continued deterioration in banking system liquidity that could pose headwinds to stock prices.
Iron Ore: 117 USD/Ton and Upwards to 130 Short-Term, Catalysts To Watch and Our Stock Screener
- Iron ore continued to lounge around the 117 USD/ton levels, but there is increased optimism for Iron Ore and The China Property/Auto Stimulus Angle
- Spreads between 65 and 62 widened to 13.8 USD/ton from 12.6 USD/ton last week, and we expect this spread to build further.
- The street now widely anticipates the China TSF number between 9-15th of May, which is expected to grow in April at 14.5% YoY on consensus estimates to 1.4 trillion Yuan.
Steno Signals #98 – The recession panic is back right as liquidity is returning!
- Happy Sunday from a wet Copenhagen!Let me just admit to it upfront.
- Last week didn’t play out according to my macro thesis.
- The US cycle suddenly showed signs of weakness in surveys, which alleviated some of the pressures in USD rates and in USD versus Asian FX.
1st Quarter 2024 Letter to Investors
Outperformance of Metals and Mining sector: The fund’s gold, copper, and lithium investments outperformed their respective industry performance.
Interesting trends in the gold market: We examine gold prices and propose a shift from wealth-driven to fear-driven consumption patterns. We also identify several events that could reduce fear and slow gold price momentum.
The evolving situation at OCI: The fund holds a 6% position in OCI, a global fertilizer business that announced two significant asset sales in December 2023, from which we expect to receive a substantial capital return in 2024.
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